In eight years, Indian Railways wants to be in a position to issue a ticket within five minutes of a traveller demanding it. For anyone who comes across this idea enshrined in a report titled Vision 2020, the road ahead is absurdly simple: technology would help issue more tickets to passengers at their doorstep through an array of devices.

But the Railways, even as it gets to that part about delivering the ticket, also has to deal with the fact that it needs to be able to run enough trains to meet the massive demand for seats. It is obvious to anyone who travels by rail for the first time in India that the demand for seats is much more than the supply, which is why tourists get to shoot those postcard pictures of villagers travelling on top of trains.

By 2020, the Railways needs to procure 5,334 diesel locomotives and 4,281 electric locos, spending an estimated Rs 1,20,000 crore. Given that its production units are overburdened, the Railways has decided to procure locos through public private partnerships. The Railways also does not have the resources to adequately fund its massive capital expansion needs on its own, given a surging wage bill which has significantly inflated its overheads.

The Railway Board will soon finalise a tender, to be opened in a few months, for procurement of electric locomotives vis-a-vis a joint venture with the private sector in Madhepura in Bihar. Another tender for a similar diesel loco manufacturing plant may also happen this year. Together, the two contracts are said to be worth around Rs 40,000 crore spread over a supply period of 10 years.

Keen to Join the Bandwagon

According to the plan, the Railways will provide land while the selected bidder would set up the infrastructure and assure a roll-out for a given number of years. The Railways plan to acquire around 800 electric locos from the private sector player. The modalities of the diesel loco project are being worked out. Given the massive procurement plans of the Railways, India has become an exciting market for international manufacturers.

This is why Bombardier, Siemens, GE, Alstom and EMD have all become aggressive about their presence here. Several cities in India are also constructing Metro rail system, which opens up an additional market for these companies which manufacture coaches, locomotives, signalling systems, etc.

Bombardier for instance has set up a new railway vehicle manufacturing site at Savli, Vadodara, Gujarat, as well as a propulsion systems manufacturing facility and software development centre for signalling and traction applications in Vadodara.

GE India has announced plans to set up a facility that will also manufacture diesel locomotives in Maharashtra with an investment of Rs 1,000 crore. "We are targeting India. We will participate in the tender to be floated soon by the Indian Railways for 1,000 electric locomotives. We are willing to offer 10% cheaper rates than other companies," Alstom's locomotive platform director Jean-Marc Tessier had said in an interview earlier in France. While EMD has been a long-standing technology partner for diesel locomotives with the Railways, Siemens too plans to cash in on the opportunity. Â

Slow, But Not Steady

For the Railways, these tenders would mean a generational change in the way it approaches procurement. As of now, the national transporter manufactures its own locomotives and coaches as well as relies on imports. However, the idea of assuring a massive off-take to two private players is something that the usually conservative railway board is slowly waking up to.

As of now, the Railways has the least amount of exposure to the private sector among other infrastructure segments. Critics have often accused the board of moving at a snail's pace in opening the doors to companies. Although the two projects were approved in 2006 during the regime of Lalu Prasad, the projects could never take-off on account of procedural issues. In 2008, after getting the cabinet approvals, the Railways floated tenders for setting up a diesel loco factory in Marora and an electric loco factory at Madhepura.

The tender ran into controversy as only GE submitted a bid for the diesel locos. Railway officers say at that point, they were in no position to grant the contract as it would then be perceived to have been given on nomination, which would have been in conflict with CAG norms. There have also been sharp differences among Railway Board members over these contracts with some officers having objected to the manner in which the concessions were being devised.